Tags: Clearwire | CLWR | Sprint Nextel | S | Comcast | CMCSA | Time Warner Cable

Clearwire Faces Uncertain Future

By Dan Weil   |   Wednesday, 13 Jul 2011 03:58 PM

Clearwire (CLWR), the wireless services provider, possesses marked strengths, but it faces major obstacles, too. On the plus side, it has some big-time partners. Sprint Nextel (S) owns 54 percent of the firm, and Comcast (CMCSA) and Time Warner Cable (TWC) also hold stakes. Clearwire spent $6 billion during the last two years and still has $1.4 billion in cash left, as those relationships helped it raise plenty of capital. The other companies also have more than 100 million of their own customers they can share with Clearwire.

The company’s ownership of spectrum represents another plus. It has a bigger chunk than any other phone carrier in the country, even bigger than AT&T (T) and Verizon (VZ), according to Morningstar. With the explosion of wireless devices such as smart phones and tablet computers and the rise in data pumped through them, more spectrum will be needed.

AT&T’s agreement earlier this year to buy T-Mobile for $39 billion reinforced the jump in spectrum value.

Bad with the good

But now it’s uncertain how Clearwire will raise more capital, which it needs to expand. The company wants equity investments from strategic investors but has had to settle for bonds as of late.

Its relationships with current partners haven’t always been smooth. There have been fights over strategy, particularly with Sprint.

Still, Clearwire’s customer count rose by 1.8 million in the first quarter, well above analysts’ estimates. In its first-quarter earnings report, the company forecast a total customer base of 9.5 million by year-end, up from its prior forecast of 8.8 million.

A report from Ned Davis Research demonstrates Clearwire’s mixed state of affairs. On one hand, the firm’s analysts assign the stock a sell rating.

On the other hand, they write that it’s undervalued based on its price-to-book ratio of 0.88, which stands well below the bottom quintile value of 1.54 for the telecommunications services sector.

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Clearwire (CLWR), the wireless services provider, possesses marked strengths, but it faces major obstacles, too. On the plus side, it has some big-time partners. Sprint Nextel (S) owns 54 percent of the firm, and Comcast (CMCSA) and Time Warner Cable (TWC) also hold stakes....
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